July 29, 2022

Developing an Effective Employee Value Proposition

by Christy Davis

THE GIST

Health systems are facing stiff competition for lower-wage workers, and high attrition among younger RNs. To attract and retain all types of employees, health systems need to design and implement an employee value proposition that responds to pressures in the job market and distinguishes them from their competitors.

THE FACTS

  • Yearly attrition for all hospital workers rose from 18 percent in 2019 to 26 percent in 2021.
  • 27 percent of total hospital employees work in jobs with a lower median wage than the average Amazon Fulfillment Center employees.
  • The registered nurse (RN) workforce under 35 years of age declined by four percent from 2019 to 2021.
  • Only 19 percent of RNs under age 35 agree with the statement, “My organization really cares about my wellbeing.”

OUR ANALYSIS

1. Given current labor market competition, health systems must clearly lay out why an employee should choose to work for them

The COVID pandemic has driven health system vacancies and attrition rates to all-time highs as employees decide that the financial, emotional, and professional rewards for working for a hospital don’t compensate them for the value they generate for their employer. Workers are rejecting the current health system employee value proposition. What they receive from the health system in return for what they bring to the organization is no longer sufficient. Most health systems cannot provide a succinct and compelling response to the threshold question of “Why should I work for you instead of someone else?” At best, some health systems point to an employee compact that shows a commitment to the organization’s cultural values—like excellence, support, trust, communication, etc.—that, while important, do not distinguish them in today’s competitive job market.

To rebuild a stable and committed workforce, health systems must create and then communicate a compelling new employee value proposition—a concise statement highlighting why employees should choose to work for them. This may sound basic, and it is. But most health systems’ response to the workforce crisis has consisted of myriad siloed efforts spanning different departments, targeting different workers, and envisioning different time horizons. A strong, shared employee value proposition can cut across the siloes and provide the strategic clarity needed for organizational change.

2. Developing the strategic “pillars” of a health system employee value proposition

The first step in crafting an effective employee value proposition is deciding on an overall vision: How do we differentiate our organization from other employers in our job market? It will not be possible for every health system to be, for example, the highest paying employer in their region. But a compelling value proposition may lean on other areas where the organization can excel. For instance, the organization may seek to be the most flexible employer, the most accommodating to workers with young families, the most committed to professional advancement, or some combination of these and other traits.

While health systems may have different overall vision statements, there are three pillars of value that all organizations will need to address for employees in their value proposition: 1) compensation; 2) work-life balance; and 3) career support. The order of these pillars is not coincidental. Maslow’s famous “hierarchy of needs” translates well to the dynamics of the health system workplace. What Maslow would call “self-actualization” needs—advancing in a career for example—only become relevant when workers have their more basic material and emotional needs met. 

Compensation

The bedrock of a compelling employee value proposition is competitive total compensation. Health systems are struggling to keep up with rising wages. Registered nurse (RN) wages have been pushed up, as supply has been constrained by nurses leaving the field or opting for lucrative traveler roles. Lower-wage workers, including nursing assistants, environmental service workers, and techs, who previously may have had fewer higher-wage job prospects outside of their local hospital, are seeing more attractive opportunities than ever before. Given economy-wide inflation and the continued worker shortage, systems should expect that compensation benchmarks will change more rapidly than in previous years. 

Employee benefits are a key part of total compensation and an area where health systems have historically performed well. While nearly all health systems offer strong basic benefits (health insurance, paid time off, and retirement programs), there is considerable variability among health systems when it comes to the breadth of benefits offered. Now that employers like Amazon are offering robust benefits, like paid parental leave and paid tuition, even for entry-level employees, health systems may need to make changes to remain competitive. Health systems should consider targeting new benefits at both younger and lower-wage workers, as the pandemic has resulted in greater attrition in these categories of employees. 

Gist Healthcare recently reviewed public information about the benefits offerings of over a dozen major health systems and found that many systems appear to be targeting younger workers with novel benefits offerings, such as student loan repayment packages, childcare stipends or down-payment assistance for homebuyers.

Work-Life Balance

Attractive total compensation is necessary, but not sufficient, for competing in today’s job market. Health systems must also prioritize flexibility to match work-life balance priorities of many in the workforce. Health systems have an opportunity here to differentiate themselves from their competitors by customizing jobs around workers’ preferences and schedules. 

This may be daunting, particularly in nursing, where the 12-hour shift is still the standard for many health systems. Shorter shifts increase the number of patient hand offs, so they may not be appropriate for all units. But where appropriate, health systems should engage nursing and other clinical leaders to offer employees variable shift lengths. New technological solutions can ease the scheduling details, and cross-trained nurses can provide the backup needed to make shorter shifts more practical.

A word of caution on scheduling flexibility. To most hospitals, a flexible workforce has long meant continually adjusting staffing levels based on daily patient census, and maintaining a float pool. While that is cost-efficient, it does not provide the kind of work-life balance that is an increasing priority for hospital employees, especially nurses.

Health systems must also prioritize supporting the emotional wellbeing of their employees. The pandemic has taken a heavy toll, particularly on younger RNs. Many health systems are responding by adding more behavioral health supports, both onsite and as part of health benefits. Many are also taking measures to guarantee that employees, especially floor nurses, will be able to take their scheduled shift breaks. Addressing emotional wellness also means establishing clear, and consistently enforced, standards to combat bullying from fellow workers and threats of violence from patients and others. 

Career Support

Professional growth and career advancement used to be a competitive advantage for hospitals, especially for lower-wage workers. Now plenty of other employers are offering clear pathways to develop new skills and increase pay. Health systems should continue to focus on their strengths in this area, ensuring that they are highlighting compelling career paths for both prospective and current employees. Some health systems are going a step further by backing up their career support efforts with enhanced benefits, providing tuition assistance and even tuition-free programs to help employees obtain the educational credentials necessary for advancement.

Training and mentorship programs, which many organizations had to curtail during the pandemic, are also key for many employees—especially early career nurses. Preceptorships and nurse residencies are the best documented and most successful ways of keeping newer nurses engaged and on the job. 

3. The process of creating an employee value proposition matters as much as the final product

The set of promises that constitutes an employee value proposition is not the only reason for creating one. The process of creating a new employee value proposition should be an employee engagement tool in its own right, leveraging focus groups and different teams of employees across the organization. Who better to answer the question of what employees want than the employees themselves?

At a deeper level, developing a new value proposition will require identifying the strengths and weaknesses of a health system’s current—and often only implicit—value proposition. Both the process and the final product will bring together different stakeholders and lead to the frank discussions and leadership buy-in necessary for real change in the workplace. A prime example is around scheduling flexibility, which has profound implications for nursing managers and cannot simply be mandated top-down. 

Creating a compelling employee value proposition is not as simple as selecting from a dropdown list of options. Health system leaders will need to answer key questions to prioritize their employee commitments in accordance with their organization’s goals, financial resources and appetite for change including:

  • Do we want to match or lead the market in our employee compensation levels?
  • Will targeting certain categories of employees with expanded benefits create tension across our workforce? 
  • Are the advantages of flexible scheduling worth the difficulty of the operational changes it will require? 
  • How are we ensuring the continuing education opportunities we offer are actually available to our employees? 

Organizations should then use the “final product” of the process—ideally a concise, one-page document—both internally and externally, for recruitment and retention marketing and branding.

4. While an organization’s culture and mission matters, focusing on those is not a substitute for concrete commitments in other key areas

In most communities, health systems have long been prestige employers, and there is no doubt that the meaning in healthcare work goes far beyond just a paycheck. But systems need to be wary of having an employee value proposition that leans too heavily on the mission of the organization and the selflessness of its workforce. Culture and values will always be central to a health system’s identity, but reliance on the intrinsic worth of the healthcare mission must be balanced by other concrete commitments in key areas that also matter greatly to employees. Health systems already take care of their patients, and must take care of their employees too.